Processing invoices automatically: how does it work?

Processing invoices automatically means the software does the reading and the coding, and a person does the confirming. An invoice comes in, its data is extracted, a booking proposal is prepared with a general ledger account and VAT code per line, and after your check the journal entry goes to your accounting package. In this article you can read what happens in each of the six steps, which parts really are automatic and what to test before you choose a solution.

Contents

• What does automatic processing cover?
• The six steps
• Which fields are recognised
• What you gain
• What to test before you choose
• Start small and scale up
• Frequently asked questions

What does automatic processing cover?

The term is used for two different scopes, and the difference matters when you compare suppliers. Some mean the reading only: an invoice becomes data. Others mean the whole route up to a journal entry in your accounting package, including the coding and an approval route. What almost nobody means, whatever the marketing says, is posting without any human confirmation, because an entry with the wrong coding still has to be corrected afterwards.

The six steps

1. Delivery. Paper invoices are scanned or photographed; PDFs, UBL files and Peppol invoices go straight into the queue. One address for everything is what keeps invoices out of personal mailboxes.
2. Character recognition. An image is straightened and converted to text. A UBL or Peppol invoice skips this step, because the data is already structured.
3. Field recognition. Supplier, invoice number, date, payment term, amounts per VAT rate and the individual lines are located, and the supplier is matched to a creditor in your administration.
4. Validation. The result is checked against itself, so a total that does not match the lines or a VAT amount that does not match the rate is flagged rather than passed on.
5. Booking proposal. A general ledger account and VAT code are proposed per line, based on your earlier entries. You confirm or correct, optionally after an approval route.
6. Entry and archive. The journal entry goes to your accounting package with the document attached, and the invoice stays searchable with an audit trail.

Which fields are recognised

• Invoice number, invoice date and payment term
• Supplier details, including VAT number and IBAN
• Amounts per VAT rate, split when one invoice carries several
• The individual invoice lines, which is what makes cost centres and split coding possible

Handwriting is the exception. It can sometimes be read, and on a receipt with a handwritten total you should expect a correction rather than rely on the result.

What you gain

• Time. The typing disappears, and so does the queue of invoices waiting to be entered.
• Fewer typing errors. Amounts are read off the document rather than copied by hand.
• A current view. Invoices are processed on the day they arrive, so your outstanding liabilities are up to date.
• Traceability. Who did what and when stays recorded per document, which is what an auditor asks for.

What to test before you choose

Use your own invoices rather than a demo set, because accuracy depends on the suppliers you actually have. Check whether recognition reaches line level or stops at the total. Check the connection to your accounting or ERP package, since without it somebody still enters the data twice. Look at how pricing works, per invoice or per subscription, and calculate it on your real volume. And note that storing invoices falls under the European data protection rules, while retention periods are set per country.

Start small and scale up

Begin with the suppliers you receive most often. Their layouts repeat, so the models learn quickly and the correction rate drops within weeks. Correct rather than confirm blindly in that period, because the corrections are the training material. Once those run smoothly, add the occasional suppliers and other document types such as receipts.

In TriFact365 this is the standard route: invoices arrive by e-mail, upload, mobile app or Peppol, are read down to line level and come back as a booking proposal, and after your check the journal entry goes to your accounting package. Read more about scanning paper invoices, about reading invoice data, or about the whole route from receipt to journal entry.

Frequently asked questions